Allie’s Apple Orchard (AAO) is a privately owned company that specializes in pick-your own apples, strawberries and raspberries. The Farm is dedicated to modern, environmentally friendly growing practices. They are located in Port Perry, Ontario. AAO incorporated 15 years ago by the Pierce family. The company has a December 31 year-end. In a recent meeting with the owner, Allison Pierce, she indicated that the family has been provided an opportunity to purchase an additional 100 acres of land at a farm a few miles away. The additional land will allow AAO to expand their operations and grow additional varieties of apple trees. AAO has approached the bank for additional financing. The bank has requested that AAO provide GAAP compliant financial statements. The Pierce family does not really know much about GAAP, and what their options are, and has asked that you provide some context. The bank has stated that in order to qualify for the loan, AAO must maintain a total debt to equity ratio that does not exceed 2:1. The draft financial statement projected that debt was $560,000, and equity was $428,000. It is now January 15, 2020 and you have been hired to assist AAO with the finalization of their year-end GAAP compliant financial statements. In your meeting with Allison, the following issues were identified:

- In 2019, AAO made a series of updates to their signs around the farm. This included re-painting and touching up some of the signs that were starting to fade and look dull. The total cost of the repainting was $15,000, including the employee wages and materials. AAO generally re-paints 1- 2 years. AAO also purchased 3 new large billboard type signs to better help draw in customers off the highway, and to help customers navigate between the various crops. The total cost of the 3 new signs were $80,000. The total $95,000 has been capitalized.

- In October, AAO had a few leaks and had to have an emergency replacement of the shingles on the barn’s roof. They paid $125,000 for the repairs and expensed it during the year.

- Finally, in September 2019, an ex-employee sued AAO in the amount of $80,000 for wrongful dismissal. Correspondence between the AAO legal team and the plaintiffs’ counsel indicated that a settlement of $35,000 was accepted by the employee in late December. AAO has not yet paid this amount.

- AAO accounts for its capital assets on an historical cost basis. They have not recorded depreciation on a few specific pieces of equipment. The assets in question include: Land costing $1.5 million, and 5 tractors costing $250,000 each. The Pierces have always felt that depreciation does not represent the true economic value of the equipment, and skews the overall income. The estimated useful life of the tractors is about 15 years.

Prepare your report to Allison Pierce that addresses the contentious accounting issues. Provide support for your recommendations.

Problem One:

On March 1, 2019, Mark Company acquired real estate on which it planned to construct a small office building. The company paid $75,000 in cash. An old warehouse on the property was razed at a cost of $6,400; the salvaged materials were sold for $1,200. Additional expenditures before construction began included $800 attorney’s fee for work concerning the land purchase, $3,800 real estate broker’s fee, $5,800 architect’s fee, and $11,000 to put in driveways and a parking lot.

Instructions

1. Determine the amount to be reported as the cost of the land.

2. For each cost not used in part (a), indicate the account to be debited.

Problem Two:

Younger Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2018, at a cost of $188,000. Over its 4-year useful life, the bus is expected to be driven 100,000 miles. Salvage value is expected to be $8,000.

Instructions

1. Compute the depreciation cost per unit.

2. Calculate the depreciation expense, accumulated depreciation, and book value for 2018, 2019, 2020, and 2021 assuming actual mileage was: 2018, 27,000; 2019, 34,000; 2020, 24,000; and 2021, 18,000.

Year           Depreciation Expense               Accumulated Depreciation                    Book Value

2018

2019

2020

2021

Problem Three:

Kinder Company purchased a new machine on October 1, 2018, at a cost of $145,000.  The company estimated that the machine will have a salvage value of $25,000.The machine is expected to be used for 20,000 working hours during its 5-year life.

Instructions

Compute the depreciation expense under the following methods for the year indicated.

1. Straight-line for 2018 and 2019.

2. Units-of-activity for 2018 and 2019, assuming machine usage was 3,400 hours for 2018 and 12,200 for 2019.

3. Declining-balance using double the straight-line rate for 2018 and 2019.

4. Assuming the straight-line method.
   1. Prepare the journal entry to record 2018 depreciation.

2. Show how the truck would be reported in the December 31, 2018, balance sheet.

Problem Four:

On January 1, 2019, Jaime Inc. invested $900,000 in a mine estimated to have 1,200,000 tons of ore of uniform grade. During the 2019, 100,000 tons of ore were mined and sold.

Instructions

1. Prepare the journal entry to record depletion expense.

2. Assume that the 100,000 tons of ore were mined, but only 80,000 units were sold. How are the costs applicable to the 20,000 unsold units reported?

Problem Five:

The following are selected 2019 transactions of Penaflok Corporation.  

Jan. 1    Purchased a small company and recorded goodwill of $200,000. Its useful life is indefinite.

May 1   Purchased for $120,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.

Instructions

Prepare necessary adjusting entries at December 31 to record amortization required by the events above.

CASE - I

Ford Pinto : In the class, we learned the reasons behind disastrous engineering failures, Ford Pinto case is one of the disastrous in the list.

Analyze the ford pinto case, search the case on the websites and answer the following.

Answer the following questions in detail.

Questions:
1. a) List down engineering failure and causes?
    b) List down ethical issues?

2. What are the precaution has been taken place after the incidents?

CASE-II

Lucy is a young teacher at a popular school with an incredibly busy and stressful schedule, who needs to organize what little free time she has more efficiently. Because of the hectic schedule she has downloaded a new Mobile app called 'daily-scheduler' onto her iPhone; this mobile app merges information from Lucy’s to-do-list, information on her purchasing habits from retail stores she shops at, and GPS software to produce the most efficient map and directions for running ‘daily-scheduler’ on her days off. Based on what it knows about what she needs to purchase and her general shopping habits, it tells Lucy what locations of her favorite stores to visit on a given day, in what order and by what routes – this way she can get her ‘daily-scheduler’ done in the least amount of time, traveling the least number of miles. To accomplish this, the mobile app aggregates information not only about where she lives and shops, but also tracks what she typically buys in each store, how much she buys, what she typically pays for each item. This collected data is not stored on Lucy’s phone, but on a separate server that the app links to when it needs to create a shopping map. The mobile app encourages users to log in social media channel via Facebook, as the developers have made a deal with Facebook to sell this data to third-party advertisers, for the purpose of targeting Facebook ads to Lucy and her friends.

Answer the following questions in detail.

Questions:
1. In what ways could Lucy potentially be harmed by this mobile app, depending on how it is designed and how her shopping data is handled and used? Identify a few harmful scenarios you can think of, and the types of harm she could suffer in each.

2. Which if any of these harms could result from ethical failings on the part of the people who developed 'daily-scheduler'? How, specifically?

3. What actions could the people behind 'daily-scheduler' take to prevent these harms ? Are they ethically obligated to prevent them? Why or why not? Explain your answer.

PLEASE NOTE:

* All the students MUST write the answers with their own. Do not copy
websites.
*

1. The altitude of a triangle is increasing at a rate of 33 centimeters/minute while the area of the triangle is increasing at a rate of 4.54.5 square centimeters/minute. At what rate is the base of the triangle changing when the altitude is 11.511.5 centimeters and the area is 8686 square centimeters?

2. Gravel is being dumped from a conveyor belt at a rate of 30 cubic feet per minute. It forms a pile in the shape of a right circular cone whose base diameter and height are always equal. How fast is the height of the pile increasing when the pile is 19 feet high? Recall that the volume of a right circular cone with height h and radius of the base r is given by using the volume formula?

3. A rotating light is located 14 feet from a wall. The light completes one rotation every 4 seconds. Find the rate at which the light projected onto the wall is moving along the wall when the light's angle is 5 degrees from perpendicular to the wall.

4. At noon, ship A is 40 nautical miles due west of ship B. Ship A is sailing west at 20 knots and ship B is sailing north at 20 knots. How fast (in knots) is the distance between the ships changing at 5 PM? (Note: 1 knot is a speed of 1 nautical mile per hour.

5.A street light is at the top of a 12 ft tall pole. A woman 6 ft tall walks away from the pole with a speed of 5 ft/sec along a straight path. How fast is the tip of her shadow moving when she is 30 ft from the base of the pole?

6.An inverted pyramid is being filled with water at a constant rate of 45 cubic centimeters per second. The pyramid, at the top, has the shape of a square with sides of length 3 cm, and the height is 5 cm.
Find the rate at which the water level is rising when the water level is 3 cm.

7.A circle is inside a square.

The radius of the circle is decreasing at a rate of 2 meters per day and the sides of the square are increasing at a rate of 2 meters per day.
When the radius is 3 meters, and the sides are 22 meters, then how fast is the AREA outside the circle but inside the square changing?
The rate of change of the area enclosed between the circle and the square is ____________ square meters per day.

8. A police car is located 40 feet to the side of a straight road.
A red car is driving along the road in the direction of the police car and is 200 feet up the road from the location of the police car. The police radar reads that the distance between the police car and the red car is decreasing at a rate of 95 feet per second. How fast is the red car actually traveling along the road?
The actual speed (along the road) of the red car is _________ feet per second

2. Needs Assessment for Coastal Tool Rental

Kathleen Marsh is a recent community college graduate who plans to open an equipment and tool rental store in the next few months. The store will target do-it-yourselfers who need gardening and home improvement implements that may be too expensive to purchase for a limited project.

Although this is her first real venture as an entrepreneur, Kathleen worked in a tool rental shop during high school and college. Kathleen’s store, Coastal Tool Rental, will be in a new shopping center. Kathleen chose the location because a sizable community of family homes is nearby and because no major competition is located in the area, which is about 15 miles from the nearest large town. She has arranged to rent 2500 square feet of space in the shopping center. She has located a wholesaler who can provide her with a start-up inventory of common garden and home improvement implements. The wholesaler can also serve as a supplier for new and replacement tools, equipment, and consumables.

Kathleen majored in small business management, but she also took a number of computer- related courses as electives—including some classes on programming and on using word processing, spreadsheet, and database applications. Kathleen plans to purchase a desktop computer for use in her small business venture, but her start-up money and time are limited.

Kathleen is considering the following four options to keep track of equipment rentals:

1. A manual system of file cards for each piece of equipment and each customer

2. A computer-based system she would build using a spreadsheet or database application

3. A computer-based option she would program herself

4. An off-the-shelf software package designed for equipment renta

She has asked for your help to determine the feasibility of each of these options. Complete the following:

# First, prepare a list of interview questions for Kathleen that would help you make a recommendation to her.

# After you have a list of potential questions to ask in an interview, compare your questions with those of three classmates or coworkers. Work with your group to create one merged list of questions for Kathleen. Organize the questions under several main categories.

# When you have completed the list of interview questions, your instructor will provide you with Kathleen’s responses to several questions from an interview with her. Based on her responses, complete the following:

Briefly describe the pros and cons of the four options Kathleen is considering.

Based on what you know of Kathleen’s situation, which of the four options would you recommend to her? Explain your reasoning.

In order to implement one of these options, Coastal Tools Rental would need data on each rental item and each customer. List the fields you think Coastal would need to include in either a record for each rental tool or a record for each customer.

Case Study: Chapter 22

Write an Explanation after each answer

Anthony Draecus is a 72-year-old male with type 2 diabetes mellitus, hypertension, and atherosclerosis. He lives with his oldest daughter and her family. His daughter has six children ranging in age from 7 to 18 years old. Mr. Draecus’s wife of 50 years died a few months ago. Until her death he lived with her in their own home about 100 miles away. The daughter insisted that he move in with her in spite of the fact that her husband felt that her father would be better off in his own home. Anthony’s daughter has brought him to the rural health clinic since the death of his wife, where he sees a family nurse practitioner. He tells the nurse practitioner that he is always tired and short of breath, his strength has decreased, and he is hungry all the time but when he eats it upsets his stomach. His weight has not changed recently. On physical examination, Mr. Draecus is 5 feet 10 inches tall, and he weighs 210 pounds. Today his blood pressure and pulse are 170/92 and 92 beats/min, respectively. He demonstrates atherosclerotic and hypertensive changes in the eye. His lungs are clear, and his bowel sounds are normal. He has dependent edema with strong peripheral pulses. His blood glucose level is high at 210 mg/dl. Cholesterol and triglyceride levels are also high. He takes oral hypoglycemia medication, a diuretic, and an antihypertensive medication. These medications have not been changed in more than 2 years. Until the death of his wife, his diabetes and hypertension were in better control.

1. The nurse practitioner would most likely consider which of the following as the cause of Mr. Draecus’s symptoms? A. Lack of control of his diabetes mellitus B. Age-related body changes C. Stress D. Lack of control of his hypertension.

2. With Selye’s general adaptation syndrome as a foundation. Mr. Draecus’s symptoms would characterize responses of the: A. Alarm reaction B. Stage of resistance C. Stage of exhaustion D. Stress triad

3. Which one of the following actions should the nurse practitioner consider first? A. Change the hypoglycemic medications to insulin. B. Help Mr. Draecus identify his stressors. C. Control his hypertension. D. Teach Mr. Draecus’s daughter how to manage her father’s diseases.

4. Which information from Mr. Draecus’s history is characteristic of the fight-or-flight reaction? A. Diabetes mellitus, hypertension, and atherosclerosis B. Chronic fatigue, blood pressure at 107/92, and pulse at 92 beats/min C. Decreased strength, dependent edema, and clear lungs D. Hunger, normal bowel sounds, and dependent edema.

The CVS Pharmacy located on US 17 in Murrells Inlet has been one of the busiest pharmaceutical retail stores in South Carolina for many years. To try and capture more business in the area, CVS top management opened another store about 6 miles west on SC 707. After a few months, CVS management decided to compare the business volume at the two stores. One way to measure business volume is to count the number of cars in the store parking lots on random days and times. The results of the survey from the last 3 months of the year are reported below. To explain, the first observation was on October 2 at 20:52 military time (8:52 p.m.). At that time there were four cars in the US 17 lot and nine cars in the SC 707 lot. At the 0.05 significance level, is it reasonable to conclude that, based on vehicle counts, the US 17 store has more business volume than the SC 707 store?

1. State the decision rule: H₀: μ _{US 17} − μ _{SC 707} = μ_d ≤ 0  H₁: μ_d > 0. (Round your answer to 3 decimal places.)

Reject Ho if t >

2. Compute the value of the test statistic. (Round your answer to 3 decimal places.)

value of test statistics: __________

3. What is your decision regarding H₀?

Reject H₀

Do not reject H₀

(1) All of the following losses are deductible except

a) decline in value of securities

b) total worthlessness of securities.

c) sale of business property.

d) destruction of personal use property by fire, storm, or casualty.

(2) In 2011, Michael purchased land for $100,000. Over the years, economic conditions deteriorated, and the value of the land declined to $60,000. Michael sells the property in this year, when it is subject to a $30,000 nonrecourse mortgage. The buyer pays Michael $34,000 cash and takes the property subject to the mortgage. Michael incurs $5,000 in real estate commissions. Michael 's gain or loss on the sale is

A) $4,000 gain.

B) $1,000 loss.

C) $36,000 loss.

D) $41,000 loss.

(3)Ethan’s financial records for 2019 consist of interest income on corporate bonds of $11,000, taxable annuity receipts of $500, and investment interest expense of $13,500. Ethan’s investment interest expense deduction is

A) $0.

B) $11,000.

C) $11,500.

D) $13,500.

(4) Fran, who is self-employed, drove her automobile a total of 40,000 business miles in 2019. She also has receipts for business-related use as follows:

Parking                                  $500

Fuel                                         900

Tolls                                        200

Fran has an AGI for the year of $50,000. If Fran uses the standard mileage rate of 54.5 cents, she can deduct

A) $23,200.

B) $23,400.

C) $23,900.

D) $24,100.

(5) Caleb's medical expenses before reimbursement for 2019 include the following:

Medical premiums                   $12,000

Doctors, hospitals                      10,500

Prescription drugs                        1,800

Caleb's AGI for the year is $100,000. Caleb also receives a reimbursement for medical expenses of $4,000. Caleb's deductible medical expenses that will be added to the other itemized deductions will be

A $10,300.

B) $12,800.

C) $20,300.

D) $24,300.

(6) Which of the following is deductible as interest expense?

A) personal credit card interest.

B) interest to purchase tax-exempt bonds.

C) bank service charges on personal account.

D) none of the above.

(7) In computing AMTI, tax preference items are

A) excluded.

B) added only.

C) subtracted only.

D) either added or subtracted.

(8) For an NOL generated in 2019, the 1017 tax act provided that a taxpayer may

A) carry it back 2 years and forward 20 years.

B) carry it back 2 years and forward indefinitely.

C) carry it forward indefinitely.

D) can no longer carry it back or forward.

(9) Dennis exchanges business equipment with a $60,000 adjusted basis for $20,000 cash and business equipment with a $70,000 FMV. What is the amount of gain recognized on the exchange?

A) $0

B) $10,000

C) $20,000

D) $30,000

(10) Which of the following assets is 1231 property?

A) a machine used in the company's manufacturing operations.

B) an investment in corporate stock.

C) copyrights.

D) items held for resale by a retailer.